Prince Charles today urged world leaders to support an “emergency package” to save rainforests by diverting billions of pounds every year to tropical nations such as Brazil and Indonesia.

The prince told senior figures – including the French president, Nicolas Sarkozy, and US secretary of state, Hilary Clinton – that they must “strain every sinew” to find ways to halt the destruction of forests across the world.

He took advantage of the G20 meeting in London to convene his own meeting at St James’s Palace where he announced the results of a 18-month study which aims to find a way to channel funds to protect forests as part of the fight against climate change. Emissions from tropical deforestation contribute some 17% of annual greenhouse gas emissions, more than the world’s transport sector.

Charles set up his Prince’s Rainforest Project in autumn 2007 to find ways to make natural resources “worth more alive than dead” in countries where producers are clearing land to meet a demand for goods such as beef, palm oil, and logs.

In a foreword to the report setting out the project’s findings, Prince Charles said: “If deforestation can be stopped in its tracks, then we will be able to buy ourselves some much needed time to build the low-carbon economies on which our futures depend. If we fail, global warming will occur faster and more dramatically… Knowing this I felt I should do all in my power to help find some kind of solution.”

The study suggests rainforest nations could sign up to five-year contracts under which they would commit to reduce deforestation to agreed levels. In return, they would receive annual payments. The bulk of this money, the group says, would only be paid if satellite pictures confirmed the trees were being protected as promised.

It says: “This would be a business-like arrangement, a service contract under which the world pays rainforest nations for delivery of ecosystem services, rather than providing aid in a traditional way.”

The project said about £10bn each year could be paid in total, which could be held and allocated by a new global body. Tropical countries would be free to choose how to spend the money.

Donor nations, such as Britain, would be asked to commit to long-term funding. “It would be up to individual countries to decide how to finance their obligations,” the report says. Possible options include a levy on insurance premiums, aviation and shipping fuel or auctions of carbon pollution permits. Rich nations could also offer “rainforest bonds” to big investors such as pension funds.

Tony Juniper, former head of Friends of the Earth and an adviser to the project, said such financing was less controversial than the extension of carbon markets to forests, as is planned as part of a new climate treaty. “We’re not selling credits here that governments can use to offset their emissions.”

The prince’s scheme is intended to provide funding faster than such forest credits, which could take a decade to be realised, he said.